The phrase “money laundering” gained prominence during the Watergate Scandal when President Richard Nixon’s Campaign Committee moved illicit campaign donations to Mexico and then brought the funds back through a shell corporation in Miami.
In every election year, Kenyans experience extraordinary generosity from politicians. The countryside comes into life with new projects and unsolicited donations towards various courses. Is this excessive benevolence always genuine and who funds it?
From globe trotting, forming new charities, trusts and foundations, to plans for expensive associative lunches and dinners, politicians are sparing no efforts to raise campaign funds for this year’s general election. The clamour for a Ksh. 6 million send off by members of the 9th parliament should be seen in the same light. In a nascent democracy, there is always a risk that the governing party could use public funds or dispose of state assets to fund its campaign. The allocation of Karura Forest land around 1997 is a fine example. In developed democracies, political parties raise their campaign funds from member subscriptions and sponsors in an open and transparent manner. They are also subject to regular and independent audit by the state.
The Political Party Parties Bill, 2004 is yet to become law meaning that Kenya has no law or appropriate structures to regulate and audit political party finance. Parties and contestants are therefore free to raise campaign funds using every available means. The stakes are higher in this year’s election since the opposition is seeking to unseat a serving president. Racketeers and wheeler dealers are lining up watching keenly from the sidelines for the perfect opportunity to “invest’ in the right political party or alliance. Such an investment does not come cheap and is incredibly dear to the taxpayer in the long run.
The pay back comes in several ways. It can take the form of poorly negotiated public procurement deals which are highly lopsided against the state. The citizens end up paying many more times the value of ordinary items procured by the sate. Financial scams such as the Goldenberg and Anglo Leasing all appeared during election campaigns. Another form of compensation is protection from arrest and prosecution by the law enforcement agencies of the state. In 1973 Robert Lee Vesco donated huge sums of money to the Nixon campaign in a bid to ward of investigations into a financial scam involving US $ 220 Million by the United States Securities and Exchange Commission (SEC). Vesco later fled to Costa Rica and donated US $ 2.1 Million to a company owned by president Jose Figueres who in turn passed a law to guarantee that Vesco would not be extradited to face trial in the US.
Since money and politics are like two sides of the same coin, Kenya is not immune to such deals. Corrupt politicians and mercantile sharks will stake their money with the party or coalition most likely to win. Come next year, the victorious beneficiary regime may then be strained into complacency and acquiescence of the predicate crimes committed by these benefactors. The governing party will then use state power to obstruct or thwart investigations into party and campaign finance corruption. This explains why serious trans-national crimes such as drug trafficking, tax evasion, illicit trade in arms, human trafficking, cyber crime, smuggling and trade in endangered species sometimes appear to have the backing of officialdom. In Kenya one can add pyramid schemes, cattle rustling, poaching, violent robberies, extortion and car jacking. There is a great possibility that some politicians may be linked to attempted incidents of trade in the endangered Osyris lanceolata (Sandalwood) intercepted by the Police and Kenya Wildlife Services (KWS) in Central Kenya and Rift Valley.
Policing political campaign financing is as hard as implementing price controls. Politicians and lobbyists are likely to use shell companies, charities and trusted organisations to shift funds around so that contributions from suspicious sources are disguised as legitimate and used for personal gain. The situation is more even complicated by the failure of the 9th parliament to pass the Proceeds of Crime and Money Laundering (Prevention) Bill, 2004. Reputable businesses, financial and professional firms need to be more stringent to guard against being used as conduits of campaign donations derived from illicit sources. They should strictly observe the Prudential Guidelines of the Central Bank of Kenya, the Capital Markets (Securities) Regulations and the international Anti- Money Laundering Principles to guard them against loss of reputation that comes with real or perceived association with perpetrators of financial crime.
It is never in the interests of the ruling class to pass laws that hamper their ability to manoeuvre around political campaign finance. However, the best gift the 9th parliament can give Kenya is to pass the Political Parties and the Proceeds of Crime and Anti- Money Laundering Bills. This will promote and entrench transparency and accountability in the electoral process in Kenya. This could be their last saving grace after nearly 5 years of estrangement with the voters.
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